Economic Development of Kenya and Singapore - Case Study Example

REASONS FOR THE DISPARITY IN ECONOMIC GROWTH AND DEVELOPMENT BETWEEN KENYA AND SINGAPORE Introduction It wasduring the 1960s that most African British colonies were gaining their independence. This was also true for Britain's colonies in East Asia. Another feature that these young nations had in common was that their economies had been left in a deplorable state. They were like the skeletons left behind by a scavenger after it has had its fill on the flesh of its prey (Meredith, 2000). It was from this pathetic state that the young nations had to build themselves up. This was made doubly difficult because the colonialists had not implemented the institutions and structural policies to advance for the development of the natives. Whether it is in the form of education, governance, or availability of social amenities, the colonial powers had made no moves at empowering their subjects (Meredith, 2000). The departure of the colonialists, though an event that had been looked forward to by the natives, who had fought hard for their freedom, also brought great trepidation. The young nations had to take their first wobbly steps in self governance, international relations and trade, as well as come to terms with globalization which was being thrust upon them. Kenya and Singapore, who attained independence within two years of each other in 1963 (Ndulu, 2008) and 1965 (Yew, 2000) respectively, both had underdeveloped economies with limited industrialization and a heavy dependence on the agricultural sector. However, there was great potential for development for both countries. Forty years down the line, Singapore, along with several East Asian countries, has been able to raise herself from the status of 'third world' to a quickly growing economy. Kenya, and most other African countries, on the other hand, is still mark timing with no real advances made (Findlay et al, 1993). The question then arises why today majority of African countries, taking Kenya as a case study, are vastly underdeveloped economies while those in East Asia have moved up the ladder to be labeled as fast growing economies. This is what shall be analyzed and discussed, by reviewing both countries economic policies, their strengths and shortcomings to try find out what has been done right, or what needs to be revised. 1960: A look at Kenya and Singapore four decades back Le Blanc (1980) traces Singapore's economic growth from 1960 to the 1980s. He says that though Singapore was considered an underdeveloped economy in the sixties, the transformation that was to be seen two decades later was amazing. On the basis of the three most common development indicators namely, social services, education and per capita output with little indebtedness, Singapore can simply not be classified as a third world country (Le Blanc, 1980). Singapore under British colonial rule was considered a major trade port and a military outpost for Britain. However, with the disintegration of the colonial empires, Singapore faced a privation because she had been the meeting point for these empires. Her trade was built around exporting spices, rubber and timber in exchange for machinery and processed goods. When Indonesia and Malaysia gained independence, they opted not to conduct trade with Singapore and thus she lost thee source of her export materials (Daquila, 2000). Her situation was made worse by the communist agitations in china, the impacts of which she experienced in the form of civil unrests and political tensions within the country that scared away any aspiring foreign investors(Yew, 2000). Singapore looked abroad for help on the way forward and was receptive to the recommendations made by the United Nations Industrial Survey Mission. The Singaporean government realized that it had to achieve three things before it could move towards industrialization (Dent 2002). These were: - The abolishment of the communist party so as to create room for industrial stability as well as instilling discipline in the relationships between employers and employees. -The government realized that since it lacked the technological know how needed to make advances in industrialization, hence there was an urgent need to encourage foreign firms who had the capacity to invest in the country's industrialization's efforts. -The government was open to the concept of 'free enterprise' and this was the foundation on which they built their system for industrialization (Dent, 2002). In summary, Singapore's philosophy was that, after making a critical analysis of the situation, they had to act according to what this situation presented and if need be, implement what was being practiced abroad to further their own interests . The policies implemented by the government of Singapore indicate that their approach to development and industrialization is one that is dynamic. There is a periodic evaluation of global trends after which there is a revision of their policies to align it to those of the global market. This way, they are able to remain relevant and have a higher capacity to adapt to change (Blomqvist, 2005). Factors that facilitated for Singapore's industrialization Location. Singapore is located between western Asia, eastern Asia, who are an abundant source of her export, and Europe who acts as a ready market for her exports (Chong-yah, 1996). People Way back in 1960, when Singapore was still insignificant on the world map, the government of Singapore realized that one of its most valuable assets was the people. Thus, it has strongly been inculcated in Singaporeans the culture of hard work, self-discipline, patriotism and entrepreneurship (Geiger & Geiger, 1973). The government invested heavily in the education sector so that the literacy levels in modern day Singapore are impressively high(McMahon, 1999). This would provide the people with the capacity to engage fully in the process of industrialization and development. That Singaporeans have been trained to work on the basis of meritocracy where one is awarded and recognized for achievements hence inspiring better performance (Geiger & Geiger, 1973). Availability of administrative and political capabilities Singapore has had a stable political environment since gaining independence. This has enabled economic growth because the government has been able to focus solely on development. Also, the stability of her labor markets has greatly encouraged foreign investors to do business with her. Singapore has an economy that is all rounded, not agrarian based as it was in the 1960s. Her industries implement the latest technological advances and produce high quality materials that have a world wide market. Made in Singapore is a trade mark that has come to be recognized and respected globally (Huff, 1997). Kenya's shortcomings Corruption and misappropriation of funds The government of Kenya has often time been beset by corruption scandals where high placed officials within the government are implicated in siphoning of funds from the national treasury. The Goldenberg and Anglo-Leasing scandals involved over one billion US dollars and implicated several ministers, some of who were forced to resign (Ryu, 2006). The Kenya Anti-Corruption Commission was formed in 2000 to investigate such corruption cases and to see that the accused were justly executed. A survey done by the KACC showed that Kenyan citizens were disillusioned by the government and that they believed that ministers and officials high in government were the most corrupt (Johnston, 2000). Focus on parastatal organizations For a long time, most of Kenya's companies were owned by the government and it has only been in recent years that there has been a shift towards the privatization of these companies. Such companies were grossly mismanaged and others had to be shut down for example the Kenya Creameries Cooperative which was defunct for a number of years. This was because there was lack of accountability. Government policies The policies formulated by the Kenyan government on development and economic growth are sound, at least on paper. The problem is in the implementation of these policies. Power within the Kenyan government is always changing hands, especially within the ministries where ministers have to resign when faced with corruption charges or have to step aside to allow investigations. There is also regular reshuffling of the cabinet for one reason or another. It is rare for an appointed government official to finish out his term. Every new holder of office introduces new system of running things. Whatever the predecessor had started on is scraped and forgotten. These disruptions have not allowed for ample time to successfully implement any policies (Ndulu,2008). Lack of institutions capable of carrying through free enterprise and trade Although free enterprise has stimulated the growth of Singapore's economy, because from the start Singapore had been receptive to free trade and put into place institutions that would support it, in Kenya it has done more harm than good. In a newspaper article, journalist Okoko (2001)notes that the opening of the Kenyan market has choked local industries especially the textile and shoe industries, which cannot compete with cheap imports. High costs of production and high taxation Other problems which face Kenya's attempts at industrialization, Okoko points out, are having inadequate power supply and the general high cost of electricity. In the 1980s, there was a hydrothermal project started along Kenya's Tana River known as the 'Seven Dams' project which would see the strategic construction of seven dams along the targeted river(Murunga & Nansongo 2007). If this project would have been successfully completed, Kenya would have had sufficient power supply for her industries and domestic use, as well as creating reservoirs of water for the dry spell experienced by the country in summer. However, due to the mismanagement of funds, the project has not been completed though it has been two decades. This is another indication of the crippling corruption that plagues the country(Murunga & Nansongo 2007). Kenya and Singapore today; the difference today According to the data provided by the World Bank, in 2007, Singapore had a GDP of 161.3 billion US$ and a GNI per capita of 32,470 US$ while the GDP for Kenya in the same year was 29.5 billion US$ and the GNI per capita was 680US$. The life expectancy at the time of birth for the two countries was recorded to be 80years and 53years respectively (WB, 2008). It is almost unbelievable that barely forty years ago the two countries were at par. Conclusion We can learn important lessons from comparing and contrasting how Singapore have grown and developed economically. In 1960, they were on a level platform, both newly independent and underdeveloped. Both had few industries and relied heavily on agriculture. However, forty years later there are massive disparities between the two countries with Singapore having made immense progress in her industrialization and Kenya still struggling with poverty eradication (Holtham & Arthur 1976). It can be observed from Singapore that for a country to attain development, it has to apply the right economic strategies, which have to be revised constantly in accord with the over all global ambiance. A country aiming towards development should not hesitate to borrow ideas from other countries that have made it. Singapore embraced multinationals which had the ability and know-how to help them industrialized (Mirza, 1986). The government of a country plays a central role in its development and economic growth because it is the government which formulates the necessary policies and sees that they are fully implemented. Political stability is also mandatory because it encourages foreign investors to make their base within the country. (Torado & Smith, 2007). Corruption, misappropriation of funds and mismanagement of public companies can negate the attempts made towards achieving sustainable development as seen in the case of Kenya. Kenya is also a good example of what happens when the policies formulated are not carried through, that is, if the ideas do not go beyond the written word, subsequently there is no real progress made either. There also has to be full accountability so that there is a person or institution held responsible if there are no results delivered. It can be confidently stated that is highly possible for a country to move from the bracket of 'third world' to 'developed' as long as the right approach and attitudes are manifested. Though Kenya has been practically standing o the spot for the past forty years, she could make advances if she were to borrow a leaf from the sterling example of Singapore. Bibliography Blomqvist H, 2005, Swimming with the Sharks: Global and Regional Dimensions of Singapore, Marshall Cavendish Academic, CA. Chong-Yah L, 1996, Economic Policy Management in Singapore, Addison Wesley Publishing Co. Massachusetts. Daquila T C, 2000, The Economies of South East Asia: Indonesia, Malaysia, Philippines, Singapore and Thailand, Nova Publishers, NY. Dent C M, 2002, The Foreign Economic Policies of Singapore, South Korea and Taiwan, Edward Elgar, NY, EPZ: About Kenya, 2008, Economic Policy Last retrieved on December 6th 2008 from http://www.epzakenya.com/aboutkenya Findlay R, Wellisz S and World Bank,1993, The Political Economy of Poverty, Equity and Growth, Oxford University Press, US. Geiger T & Geiger F M, 1973, Tales of Two City-States: The Development Progress of Hong Kong And Singapore. Published by National Planning Association. Holtham G & Arthur H, 1976 Aid and Inequality in Kenya: British Development Assistance to Kenya, Taylor and Francis, London. 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Ministry of Trade and Industry, Singapore 2008, Economic History Last retrieved on December 6th 2008 from http://app.mti.gov.sg/default.aspid=545 Mirza H 1986, Multinationals and the Growth of the Singapore Economy, Routledge Publishers, NY Murunga G & Nasong'o W, 2007, Kenya: The struggle for Democracy, Nairobi, Zed Books Nations Encyclopedia, 2008, Kenya Economic Development Last retrieved on December 6th 2008 from http://www.nationsencyclopedia.com/Africa/Kenya-ECONOMIC-DEVELOPMENT Ndulu J B, 2008, The Political Economy of Economic Growth in Africa, 1960-2000: Country Case Studies, Cambridge University Press, Cambridge. Okoko T, 15 February 2001, 'Kenya Has Worst Economic Performance Since 1963' Panafrican News Agency, Dakar. Last retrieved on December 6th 2008 from http://www.hartford-hwp.com/archives/36/158.html Ryu A, 24 July 2006, 'Kenya Still Beset by Widespread Corruption' Last retrieved on December 6th 2008 from http://www.voanews.com/english/archive/2006-07/ Todaro P M & Smith S C,2003, Economic Development Addison Wesley Publishers, Massachusetts. World Bank, 2008, Key Data and Statistics Last retrieved on December 6th 2008 from http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS Yew K L, 2000, From Third World to First: The Singapore Story, HarperCollins Publishers, NY. Read More